Much has been said about the mining of crypto currencies and how the process guzzles electricity. Could crypto-mining pose a threat to the electricity dynamics in Zimbabwe in the future?
Mining is a process that creates new digital coins by solving complex mathematical problems using very powerful computers, day and night, non-stop.
That wouldn’t be a problem if it were only a few computers in use. But thousands of power-hungry machines are plugged in throughout the world, and that means a lot of electricity.
As at February 19, for example, Bitcoin mining was thought to consume more than 51 000 Gigawatts hours of electricity each year worldwide, according to the Bitcoin Energy Consumption Index produced by Digiconomist, an online cryptocurrency hub.
Let’s put that into perspective — that’s five and half times as much the power used by Zimbabwe, a developing nation, for the whole of 2015.
Or enough electricity to power Zimbabwe’s 3,1 million households for the next ten years or more, according to calculations by the Business Weekly.
There is no known corporate mining rig here, though some individuals have decided to dip their toes into the mining waters.
We could hazard that a fraction of the 41 000 people trading crypto on local exchange Golix.com are to some degree mining on their personal computers. Or that they are doing it elsewhere. Obviously, these aren’t all the Zimbabweans doing crypto.
But because there is also no authoritative source on power use involving crypto-mining (Zera doesn’t produce this data), that means most of the mining taking place at individual level and the electricity they consume remains as obscure.
Digiconomist has produced a model for calculating electricity use from Bitcoin mining that is widely used across the world, which could help estimate the amount of energy used by citizens mining crypto in Zimbabwe.
The formula, which depends on the performance of ordinary mining equipment, expresses the miner’s operating costs as a percentage of the total mining revenues (historically at around 30 percent) before converting the operating costs to energy consumed. The conversion is based on the average cost of electricity.
That means an individual mining Bitcoin in Zimbabwe, raking in say $100 in revenues every week could be using 304kWh of electricity — almost half the average annual per capita power usage — based on estimates of operating expenses at 30 percent of revenue and electricity price of 9,86ckWh, according to our own calculations.
Manufacturers are introducing to the market more efficient mining technologies that minimise electricity use, so there is some margin of error in the estimates provided herein by the Business Weekly.
And we do not even account for the energy used to mine other cryptocurrencies like Monero, Ethereum, Litecoin and several others.
Except that isn’t the only problem. Bitcoin, a currency that prides itself as independent, cheaper and faster payment option, is evolving into a big environmental nuisance.
Its mining, reliant on coal-fired power stations in countries like China, a leading cryptocurrency market, emits the equivalent of 24,8 million tonnes of carbon dioxide each year, says Digiconomist.
According to the UN expert panel on climate change, carbon dioxide is the number one driver of global warming and climate change, a phenomenon that has spewed frequent and intense droughts and floods in Zimbabwe in recent decades, with deadly effect.
For comparative purposes, we would be keen to know the amount of electricity used by other payment options such as ZimSwitch or mobile money platforms like Ecocash, Telecash and OneMoney each year, as well their carbon footprint.
But that information isn’t readily available.
There is only about 16 million Bitcoin in circulation today. At least 3 500 coins enter circulation everyday through mining, that math solving process requiring miners to confirm every transaction in the Bitcoin network using supercomputers.
A maximum 21 million Bitcoins can only ever be issued.
Now, as long as there is still Bitcoin — or any other cryptocurrency — to mine, it seems plausible that global concern will not only focus on the legitimacy of a currency that exists only online, but also its power-guzzling systems.
Zimbabwe could easily turn into the crypto-miners’ paradise, if only power supply was reliable.
At 9,86c per kWh, the country has some of the cheapest electricity rates anywhere in the world.
The average electricity cost across southern Africa is 50 percent higher compared to the local rate.
It’s something else whether Zimbabwe, in view of past electricity shortages, could sustain crypto-currency mining of any kind at any level.